The Entry To Close Management Fee Revenue Would Be Which Of The Following?

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The correct answer of this multiple choice question is (c), as to close Management Fee Revenue, we debit it as it has normal credit balance, so to close management fee revenue account we debit it and close it by a debit in Retained Earnings Account.

The entry to close management fee revenue account is shown below:

            Management Fee Revenue a/c   XXX

                                                             Retained Earnings a/c  XXX

                                           (Management Fee Is Closed To Retained Earnings Account)

When management fee revenue account is closed by transferring it to Retained Earnings Account, it is zero out or has no balance since it is a temporary account. All the expense and revenue accounts are temporary accounts and closed at the end of the accounting period.

In T-Account of Retained Earning, we record the above entry as shown below:

                                                 Retained Earning T-Account

                                                                                              Management Fee Revenue Account  XXX

Retained earning account is credited, so we record management fee revenue account on credit side as a reason.

                                                                     Management Fee Revenue T-Account

Transfer To Retained Earning Account  XXX

Management fee revenue account is transferred to retained earnings account as shown in the above t-account of management fee revenue account.